Illustrious new recruit to my “let’s-make-money-interesting” club

Actually, he’s not a recruit to my club at all.  He doesn’t know I exist, and, of course, I don’t actually have a club.  But anyone who’s read even a fraction of the outpourings on this blog will know how strongly I believe in the need to communicate about money and financial services in ways that people find interesting and engaging.  And judging from his column in last week’s paper (http://www.guardian.co.uk/commentisfree/2008/dec/13/saturday-ian-jack) the illustrious Guardian journalist Ian Jack agrees with me.

I really do strongly recommend clicking on the link and reading his piece – it is an outstanding article, taking a line that I’ve never seen before on an op-ed page of a national newspaper.  But in case you don’t, the one-sentence summary is that Jack now greatly regrets his failure, and the failure of other journalists, to get their heads round financial subjects both for their own benefit and for the benefit of their readers.

I couldn’t agree more, but all the same he shouldn’t feel too bad about it.  The truth is, the lack of enthusiasm among arts-educated scribblers for the world of numbers and symbols entered via the keys on the top row of the keyboard is matched only by the lack of enthusiasm among providers of financial services for making their world at all accessible to them.  Knowledge is power, and in the financial world power is guarded jealously.  No-one wants anyone to understand anything, not least because more often that not, if they did, they’d urgently want to put a stop to it.

But – as I’ve written many times before – if we really are now entering a phase in history in which people are more responsible for their financial wellbeing, in the short, medium and long term, than they’ve ever been before, then breaking down these screens of opacity and mystification really is an important and urgent priority.  During a period in which paternalistic but relatively benign institutions of the State and major employers looked after most people’s needs fairly adequately, you could argue that it was no more necessary for ordinary people to know how their pensions were funded or what the cost of healthcare was than, say, how to build a motorway or how to budget for a new primary school project.  These were things that other people looked after for you.  But those days have gone.  And, as Ian Jack says, we can’t carry on being as ignorant as we are.

This is not – emphatically not – a plea for the much-vaunted “financial education.”  Rightly or wrongly, I’ve always been extremely suspicious of this.  It seems to me to be a delaying tactic on the part of the knowledge-owning priesthood, offering the potential of access to their hidden world but only to people willing to spend half a lifetime learning their arcane codes and secrets.  Education is no bad thing, but it’s not what’s required.  

What is required is clarity and engagement.  Half of this, it’s true, can’t be achieved without massive root-and-branch simplification of our insanely complicated tax and benefits system, and of the myriad of grotesquely over-engineered financial products designed partly to fit in with that system and partly to enable financial advisers to make as much money as possible from selling them, preferably without the customer noticing.  But the other half of achieving clarity and engagement, as Ian Jack has belatedly realised, requires no more than a grim determination among writers and communicators to do their sodding jobs, get their heads round the subject and write some stuff on this really important subject that people actually want to read.

Ian Jack is a brilliant writer.  If he really intends to have a go, the results will be well worth looking out for.

Oh no, the FSA has discovered…language.

In the last few days the FSA’s interminable Retail Distribution Review process has entered a new phase, with the publication of what I think is its third 200-odd page tome on the subject.  Needless to say, it represents a more or less complete change of direction from the last one, which, needless to say, represented a more or less complete change of direction from the one before, but that’s not the aspect that caught my attention.

To cut a very long story short, it repeatedly emphasises the importance of clarity in the retail distribution market, and the vital importance of achieving complete and universal consumer understanding of how the market is organised and which firms are providing what kind, or kinds, of services.  And then it goes on to explain the kinds of distributor firms that it intends should exist in the post-RDR marketplace, which as far as I can remember are on the one hand independent advisers, and on the other hand a broad species called sales advisers, in whose ranks we find those who are offering advised sales, those who are offering non-advised sales, those who are offering guided sales which may be advised or non-advised, and those who offer execution only.

Shrewdly, the FSA recognises that while what’s on the one hand may be clear and understandable enough, what’s on the other hand is very tricky indeed.  But it has a solution.  Between now and the next weighty tome, expected in June, the FSA will wheel a new weapon out onto the consumer-understanding battlefield, and with the help of extensive consumer research will find out how it is best deployed.  And the nature of this new weapon?  Language.  The FSA will undertake a major research programme to identify what words can be used to lay out this new distribution landscape in a way that consumers find entirely clear and fully understandable.

Those of us who deal with language for a living are entitled, in my view, to feel  pretty irritated about this.  The FSA has never shown the slightest interest in playing the language card before:  in fact, on the contrary, so far it has presided over a regime where, for many years, huge swathes of bewildering language have been left unchecked and uncontrolled to baffle, mislead and obfuscate consumers and make quite sure that they understand as little as possible of the products being rammed down their incomprehending throats.

Now, all of a sudden, there’s a suicide mission for language to undertake – a market structure so illogical and paradoxical that not even Lewis Carroll could begin to do justice to it – and poor old language is given the ignition keys and the white bandana and ordered to get airborne and do some serious damage.

I can tell you now, it’s not going to work. For one thing, the language to make the new proposed distribution landscape clear doesn’t exist.  Language’s Zero fighter is going to splash harmlessly into the Pacific.   And for another thing, if there’s any faint chance of language accomplishing its mission (which there isn’t), there’s only one financial specialist wordsmith expert enough to fly it to its objective, and that’s me.  And I haven’t heard a peep on the subject from anyone at Mission Control at Canary Wharf.

My Toyota and Three Mile Island

(Sorry, you’re too young – American nuclear reactor, near-disaster, meltdown narrowly averted, basis of movie The China Syndrome.)

If you see me driving around town over the next ten days or so in my ageing Toyota Landcruiser, which is making its brief annual appearance in London to get serviced and MoTd before it heads back to its home in the French countryside, you may notice that the offside is now sporting a rather individualistic two-tone paint job, still mostly dark green but now with a kind of vibrant pattern of bright red splashes adorning the lower flanks, tyres and bumpers.  You may briefly wonder why I chose to decorate the car in this way, but of course I didn’t.

Which is where Three Mile Island comes in.  They say that to create that near-disaster, ten different things had to go wrong, ranging from a faulty valve to a back-up system that was offline for maintenance through to a supervisor who was watching a ballgame on TV rather than the warning lights starting to flash. If nine things had gone wrong, there wouldn’t have been a problem.  If eleven had, there would have been a catastrophe.

In which context, here’s my story.  The evening before last, I was looking for a parking space.  The good news was that I found one very quickly.  After that, the news was all bad:

  1. In the darkness, I could see there was some sort of can in the middle of the space.  Being in the huge 4-wheel-drive, I figured (rightly) that I could drive over it without hitting it.
  2. The can was a can of paint.
  3. It was full.
  4. The paint was un-wash-off-able gloss paint, not nice easy water-based emulsion.
  5. It was bright red.
  6. In leaving the parking space, I had to make a tight left turn and put the front wheels on full lock.
  7. As a result, this time the front wheels did hit the can.
  8. The can burst.
  9. The paint sprayed outwards, not inwards, all over the side of the car, the tyres and the bumpers.

No, honestly, I’m fine about it.  I always wondered what that car would look like with scarlet tyres.  But it’s probably just as well that one more thing didn’t go wrong.  Judging from the amount of steam already coming out of my ears when I got out to survey the damage, I’d have had my own personal China Syndrome right there on the pavement.

Looks like I picked a lousy year to start saving.

I’ve never understood why the media always present base rate cuts as good news for mortgage borrowers rather than bad news for savers, but in a year when I finally paid off my mortgage and, for pretty much the first time in my life, put some money into a boring old savings account, I’m even more puzzled than ever.

They say that base rate is likely to fall by another 1% tomorrow, and is on its way down to a level of 1% or maybe even less.  From a work point of view this is very bad news, because I guess it makes savings – for some while now one of the very few buoyant sectors in financial marketing – pretty much unmarketable.  From a personal point of view it’s irritating rather than seriously troublesome:  those interest payments coming through over the last few months have been an amusing novelty rather than a significant contribution to the household’s income.  But for millions and millions of other people – especially, of course, retired people living on the income from savings and investments – the situation is now becoming extremely critical. 

This seems to me to be a major dimension of the current crisis that’s getting far too little attention.  Increasingly, among the retired and those approaching retirement, the gap between those on final salary pensions, especially of the index-linked variety, and those living on personal savings of one sort or another is widening into a chasm.  That’s bad for all those on the wrong bank of the ravine, but actually it’s bad for the stability of society as a whole:  if I was a worker faced with the abolition of a final salary scheme now or in the years to come, for example, I would fight (and when push comes to shove I mean “fight”) more and more desperately to hang on to it.  And if enough fellow-workers realised the gravity of their situation, you could imagine the Miners’ Strike of the 80s looking like a works outing.

That’s more than enough quasi-apocalyptic speculations for a Wednesday morning.  But just to let you know that assuming rates do fall tomorrow, when those Friday morning headlines are once again all about the delight of first-time homebuyers, I’ll be reading them through increasingly tightened lips, if you see what I mean.